A 2009 UPDATE ON NEW CALIFORNIA LAWS THAT MAY IMPACT THE CONSTRUCTION INDUSTRY
William C Last Jr
Attorney at Law
Last year the California legislature passed and the governor approved new legislation that will impact the construction industry. Last year, the appellate courts also rendered a number of decisions that impact the construction industry. The remainder of this article sets forth construction industry related new laws and cases.
Chaptered bills are bills that have passed through the Legislature and the Governor and are now laws. The text in this section comes straight from the California Legislative Counsel’s Digest analysis of the new laws.
SB 28 (Simitian) Motor vehicles: electronic wireless communications device
This law prohibits a person from driving a motor vehicle while using an electronic wireless communications device to write, send, or read a text-based communication, except as specified. The law will also provide that a violation point is not given for a violation of these provisions and would impose a base fine of $20 for a first offense and $50 for each subsequent offense. By creating a new infraction, the law will impose a state-mandated local program.
SB 509 (Simitian) Hazardous materials: toxic substances.
Existing law establishes the Department of Toxic Substances Control, in the California Environmental Protection Agency, with powers and duties regarding, among other things, hazardous waste disposal, underground storage of hazardous substances and waste, and the handling and release of hazardous materials.
This new law requires the department to establish a Toxics Information Clearinghouse for the collection, maintenance, and distribution of specific chemical hazard traits and environmental and toxicological end-point data.
The Office of Environmental Health Hazard Assessment will be required, by January 1, 2011, to evaluate and specify the hazard traits and environmental and toxicological end-points and any other relevant data that are to be included in the clearinghouse.
SB 593 (Margett) Department of Transportation: retention proceeds
This law prohibits the Department of Transportation from withholding retention proceeds when making progress payments for work performed by a contractor.
SB 797 (Ridley-Thomas) Professions and Vocations
This law authorizes a Board to suspend or revoke a license as a result of various things, including the licensees conviction of a crime that is substantially related to the qualifications, functions, or duties of the Business and Professions Code for which the license was issued. One of the things done by this new law is to specify that the new authorization to suspend or revoke a license is in addition to any other action that a Board is permitted to take. With respect to the Contractors’ License Law, it applies specified penalty provisions to any person named on a revoked license and held responsible for the act or omission resulting in the revocation.
SB 963 (Ridley-Thomas) Department of Consumer Affairs: regulatory boards
The present law would have sunseted various Boards and Bureaus including the Contractors' State License Board, which would have become inoperative on July 1, 2009, and repealed on January 1, 2010.
The new law changes that to becoming inoperative and repealed on January 1, 2011.
SB 1145 (Machado) State Compensation Insurance Fund
This law subjects the State Compensation Insurance Fund (SCIF) to transparency and open meeting laws. It took effect immediately upon signing by the Governor.
SB 1185 (Lowenthal) Land use: subdivision maps
This law extends the expiring of the subdivision maps giving homebuilders more time to complete existing projects.
SB 1334 (Calderon) Drinking water: pipes and fittings: lead content
The present law, with certain exceptions, prohibits the use of any pipe, or plumbing fitting or fixture, etc., that is not lead free. As of January 1, 2010, the law is revised that with certain exceptions, apply to any pipe or plumbing fitting or fixture intended to convey or dispense water for human consumption. This new law also requires that the plumbing material be certified for compliance with these provisions by an independent third party.
SB 1352 (Wyland) Public works: prevailing wage rates: wage and penalty assessments
This law deals with the hearing officers as specified in public works projects. It allows an Administrative Law Judge to hold the hearings but does not require that the Administrative Law Judge hold a hearing after January 1, 2009. This is a law that would require the Superintendent of Public Instruction to examine and evaluate the ability of school districts to build complete schools as approved by the state Department of Education with the funds provided by the state allocation board and equal amount contributed by the school district. SB 1362 (Margett) Electrician Certification
This law authorizes the Contractors' State License Board to charge a fee not to exceed $20.00 to be used by the Board to enforce provisions of the Labor Code related to electrician certification. This is in addition to any other fees to the C-10 and C-7 contractors.
SB 1432 (Margett) Contractors
This law requires that the contractor’s bond and the qualifying individual’s bond be for the benefit of a property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of the Contractors’ License Law; if the dwelling is not intended or offered for sale at the time the damages were incurred. The law also will include some information dealing with filing suit.
The law would also increase the jurisdiction of the small claims court for any action brought by a natural person against a defending guarantor that charges a fee for its guarantee or surety services from $4,000.00 to $6,500.00.
SB 1473 (Calderon) Building Standards
This law requires the California Building Standards Commission to adopt, approve, codify, update, and publish Green Building Standards for any occupancy for which no state agency has the authority or expertise to propose those standards.
The law also authorizes the Commission and the Department of Housing and Community Development to use, as the basis for the California Building Standards Code, certain model codes adopted by the Commission as the basis for the 2007 Tri-Annual Edition of the California Building Standards Code.
SB 1556 (Ducheny) School construction
The law authorizes the state Allocation Board to permit an elementary school district that meets specific qualifications to calculate its eligibility for new construction funding based on a provision that was otherwise only applicable to high school attendance areas.
SB 1608 (Corbett) Disabled persons: equal access rights: civil actions.
It is stated that this comprehensive reform increases public access for individuals with disabilities while reducing unwarranted litigation, including by encouraging the use of state-certified disability access specialists, and establishing court procedures for early judicial review of lawsuit claims.
SB 1613 (Margett) Department of Transportation: contracts
This law provides that exempt contracts up to and including $25,000 for the leasing or renting of operated heavy highway equipment for state highway maintenance purposes are not subject to certain alternative bidding procedures.
AB 387 (Duvall) Design-build: transit contracts.
This law provides that there would be no cost threshold for the acquisition and the installation of technology or surveillance equipment, which would enhance safety, disaster preparedness, and homeland security efforts.
AB 550 (Ma) Property taxation: business property: audit
This law requires the county assessor to annually conduct a significant number of audits as specified in the law, to encourage accurate and proper reporting. The law also requires 50% of the required audits to be performed on those taxpayers that have the largest assessments of locally assessable trade fixtures and business tangible personal property in the county.
AB 642 (Wolk) Design-build: counties, cities, and special districts
This law authorizes any city approved by the appropriate city counsel, to enter into design-build contracts in accordance with specified provisions. It also extends the provisions until January 1, 2016.
AB 840 (Emmerson) Real estate: licenses
This law authorizes the real estate commissioner to suspend, revoke, or deny the issuance of a license to a person who is convicted of a felony, or crime substantially related to the qualifications, functions, or duties of a real estate licensee.
AB 1062 (Ma) School facilities: uniform standards: solar design plans
This law requires the division of the state architect before January 1, 2010, to develop uniform criteria for pre-check approval process for solar design plans for school facilities that comply with the rules and regulations adopted by the department and the applicable requirements of the California Building Standards Code.
AB 2326 (Lieu) State Highway Routes 1 and 107: City of Torrance.
This law relinquishes certain portions of State Highway Routes 1 and 107, to the city of Torrance. There are specified conditions.
AB 2335 (Nakanishi) Building Permits
This new law merely repeals certain separate provisions and creates a single provision that combines and modifies existing forms, declarations, etc., dealing with permits.
AB 2376 (Price) Small and Emerging Contractors Technical Assistance Program
As you can tell by the heading, this law is for the benefit of the small and emerging contractors. The law authorizes the Department of Transportation, along with the Office of Small Business Advocate, to establish by June 1, 2009, a small and emerging contractor technical assistance program, which would provide for training and technical assistance, to small contractors.
AB 2648 (Bass) Career Technical Education
This law requires the Superintendent of Public Instruction to develop, in conjunction with the Office of the Secretary for Education, several types of colleges, the legislature, teachers, and many others, too numerous to mention, a report that explores the feasibility of expanding and establishing career multiple pathway programs in California.
AB 2738 (Jones) Indemnification: construction contracts
This law now gives subcontractors who enter into contracts after January 1, 2009 two options. Upon the tender of a claim, a subcontractor may now choose to defend the claim with their own counsel and direction or, alternatively, decide to allow the builder to hire a lawyer and agree to pay no more than a reasonable allocated share of the builder’s or general contractor’s defense fees and costs. The law requires the disclosure of the costs and coverage of wrap up insurance policies on residential and non-residential projects. Disclosing the costs of coverage details of a “wrap up” insurance policy in the bid documents allows responsible decisions to be made by project participants making these projects more predictable, competitive and, most importantly, cost effective.
AB 2922 (DeSaulnier) Air pollution; penalties; fuel containers
This law deals with air pollution and emissions of air pollutants from motor vehicles. The State Air Resources Board governs it. This law sets the maximum civil penalty for a violation of the law to be an amount not to exceed $500 per vehicle, portable fuel container, spout, engine, or other units subject to regulation under these provisions.
AB 3018 (Nunez) California Green Collar Jobs Act of 2008
This law enacts the California Green Collar Jobs Act of 2008, requiring the California Work Force Investment Board to establish the Green Collar Jobs Counsel that shall, with representatives from other agencies, develop a comprehensive array of programs to address the workforce needs that accompany California’s growing green economy.
AB 3024 (Duvall) Payment bonds: public works
This law states that any original contractor who was awarded a public works contract by a state entity involving expenditure in excess of $25,000.00 to file a payment bond. Prior to this year, the lid was $5,000.00.
AB 3025 (Lieber) Solid waste: polystyrene loose fill packaging
This law prohibits a wholesaler or manufacturer, from selling or offering for sale, expanded polystyrene loose fill packaging in this state, unless it is comprised of a specified amount of post consumer recycled material. This law goes into effect January 1, 2012.
AB 3060 (Labor & Employment Committee) Contractors: license enforcement
This law restricts the use of the moneys in the Industrial Relations Construction Industry Enforcement Fund to the enforcement of the laws relating to prohibited employment by unlicensed contractors.
Some Bills That Were Vetoed
The following are some bills of interest that the Governor did not sign. These have not become law, but we thought it was of interest to know what is going on in the Legislature.
SB 191 (Padilla) Public works: State Public Works Enforcement Fund
This bill would have required specified state agencies or school districts that choose to use the Kindergarten-University Public Education Facilities Bond Act of 2006 or any subsequent education facilities bond act as a source of funds for a public works project to pay a fee levied by the Director of Industrial Relations to cover administrative expenses for the enforcement of prevailing wage and apprenticeship requirements on projects using those funds.
SB 840 (Kuehl) Single-payer health care coverage
This bill dealt with single-payer health care coverage. The bill would have established the California Health Care System to be administered by the newly created health care agency. There were many more things involved in the bill as well.
SB 1113 (Migden) Attorney’s fees and costs
This bill would have authorized a court to award attorney’s fees and costs, including expert witness fees, in accordance with this law to the prevailing party. However, the person who defends themselves would not be able to recover costs even if the case was found to be baseless.
SB 1583 (Corbett) Employment: independent contractors
This bill stated that anyone, who for money or other valuable consideration, advised an employer to treat an individual as an independent contractor to avoid employee status for the individual would be jointly and severely liable with the employer if the individual were not found to be an independent contractor.
SB 1661 (Kuehl) Unemployment compensation: family leave: good cause
This bill provided that an individual would be deemed to have left his or her most recent work with good cause if the individual’s employment was terminated as a result of the individual’s taking a leave to bond with a minor child and taking a qualifying leave under the family temporary disability insurance program.
SB 1691 (Lowenthal) Mechanic’s Liens
This bill was about Mechanic’s Liens. It would have replaced the terms “original contractor” and “materialman” with the terms “direct contractor” and “material supplier.” It would have authorized submission of notices by means of electronic communication. It would have governed the form of security for bonds and enacted separate provisions governing private works of improvement and public works of improvement. It would have governed design professionals liens, Mechanic’s Liens, notices of cessation, Payment Bonds, and retention payments.
The bill also set forth additional requirements to govern the form of security for bonds for large projects with a contract price greater than $1,000,000.00 up to $5,000.000.00, and also had separate provisions for private works of improvement and public works of improvement.
SB 1698 (Romero) Contractors: public works.
This bill stated that after January 1, 2011, a contractor would be prohibited from performing work as a contractor or subcontractor on a public work contracted for or by the state or state agency unless he or she had obtained a “public works certification” from the Contractors' State License Board. The qualifier would also have had to pass a public works certification examination in order to obtain the certification.
SB 1717 (Perata) Workers’ compensation: permanent partial disability benefits.
This law eliminates provisions requiring an employer to pay an injured employee a decreased amount of permanent disability benefits if within 60 days of a disability becoming permanent and stationary, the employer offers the injured employee regular work, modified work, or alternative work within those specified periods of time regardless of whether the injured employee accepts or rejects the offer.
AB 507 (De La Torre) Rating organizations: Internet Websites.
This bill dealt with workers’ compensation Insurance. The insurance commissioner would provide regulations after notice and hearing, to establish and maintain an Internet website for the purposes of assisting any person to determine whether an employer was insured for workers’ compensation. The bill also required that the website be accessible for inquiries without charge.
AB 844 (Berryhill and Maze) Junk dealers and Recyclers
This bill required a junk dealer or recycler to report the information included in written records, to the Chief of Police or Sheriff. The bill would have authorized the Chief of Police or Sheriff to request weekly reports for no more than a two-month period except as specified, if there were any ongoing investigation of a junk dealer or recycler.
AB 865 (Davis) State agencies: live customer service agents
This bill was called the State Agency Live Customer Service Act. It would have required each state agency to answer an incoming call on its main public line with a live Customer Service Agent or automated telephone answering equipment with an automated prompt that allows a caller to select the option to speak with a live Customer Service Agent. There were some exceptions. What an idea!
AB 876 (Davis) Career Technical Education
This bill requested that the California State University, and the University of California take certain actions with respect to the recognition of career technical education coursework in connection with the admissions criteria of the respective universities.
AB 983 (Ma) Public contracts: plans and specifications
This bill would have required a local public entity, charter city, or charter county, before entering into a contract for a project, to provide full, complete, and accurate plans and specifications, and estimates of costs, giving direction as will enable any competent mechanic or other builder to carry them out. This would exempt any clearly identified design build projects or design build portions of those projects. The bill also stated that the local public entity, charter city, or charter county would not be required to provide bidders with plans and specifications for projects that are completed through an annual contract for repair, remodeling, or other repetitive work according to unit prices.
This bill also would have provided that these provisions not be construed to require a contractor to prove an affirmative or intentional misrepresentation or act of concealment on the part of the public entity, charter city, or charter county that provides the plans and specifications. However, the charter city or public entity could raise affirmative defenses.
AB 2002 (De Leon) Public works: payments
Existing law requires a contractor or subcontractor to submit, to the state or political subdivision on whose behalf a public work is being performed, a penalty of not more than $50 per day, as provided and determined by the Labor Commissioner, for violations of these prevailing wage provisions.
This bill would have increased the penalty to $100 for each calendar day, plus interest from the date of violation accruing at 10% per annum, as provided and determined by the Labor Commissioner. Existing law requires each contractor and subcontractor performing work on a public work to keep accurate payroll records regarding his or her employees that may be accessed by the public through the awarding body or state agencies and requires the contractor or subcontractor to produce certified copies of those records, as requested by the public, as provided, within 10 days subsequent to receipt of a written notice for those records. Existing law imposes, on the contractor or subcontractor, a penalty of $25 for each calendar day of noncompliance but provides that a contractor is not subject to a penalty assessment due to the failure of its subcontractor to comply with specified requirements.
The bill would have also increased the penalty to $50 for each calendar day, plus interest from the date of violation.
The bill would have also subjected a contractor to a penalty assessment, as specified, only when a contractor had knowledge, or should have had knowledge, of its subcontractor’s noncompliance.
AB 2081 (Coto) Workers’ Compensation
This would have prohibited an officer or director who is a sole shareholder holding less than 10% of the shares of the corporation from excluding himself or herself from workers’ compensation coverage required to be provided to other employees of the corporation, and from being subject to the specified election requirement. It would have prohibited a workers’ compensation claims adjuster from offering, delivering, receiving, accepting any rebate, refund, or commission for any referral of a claim for medical utilization services.
AB 2179 (Furutani) Air quality: diesel fuel
This bill would have required all vehicles owned or leased by an entity of the state on or after January 1, 2010, that require diesel fuel to operate to use renewable biomass-based diesel fuel if certain requirements are met.
AB 2279 (Leno) Medical marijuana: qualified patients and primary caregivers: employment discrimination
This bill would have declared it unlawful for an employer to discriminate against a person in hiring, termination, or any term or condition of employment or otherwise penalize a person, if the discrimination is based upon the person’s status as a qualified patient or a positive drug test for marijuana other than as specified. It would have allowed a person who has suffered discrimination in violation of the bill to institute and prosecute a civil action for damages, etc.
AB 2369 (Fuentes) Apprenticeship Programs: prevailing wage enforcement
This bill would have stated that the awarding body of a city with a population of over 3,000,000, which used an approved compliance program, may upon mutual agreement with the chief of the division of apprenticeship standards and the awarding body, assist the Director in Enforcement of prevailing rate wage laws and other requirements.
The bill would have also allowed a contractor to appeal the result of a labor Compliance Program Enforcement Action related to apprenticeship in public works projects through a specified procedure.
AB 2412 (Eng) Unlicensed contractors
This bill would have made a first conviction of working without a contractor’s license punishable by a fine not exceeding $5,000 or by imprisonment in a county jail for no more than six months, as specified, or both. The bill would have required that the fine for second convictions be the greater of 20% of the price of the contract, 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor, or $5,000. In addition, the bill would have required that a third or subsequent conviction be punishable by both a fine and imprisonment in a county jail, as specified, and requires that the fine be no less than $5,000 and no more than the greater of $10,000, 20% of the price of the contract, or 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor.
The bill would have also required the unlicensed contractor to make restitution to all persons who utilized the services of the unlicensed contractor and that this restitution include all payments made to, or at the direction of, the unlicensed contractor and not be offset or reduced by any act or performance. The bill would have also contained certain other requirements.
AB 2854 (Mendoza) California Small Business Advocate: Internet Web site
This bill would have required the California Small Business Advocate to establish a one-stop location on its Internet Web site for posting announcements of business-related programs and services offered by state entities and other specified information. It would have required the advocate to determine the programs, information, announcements, and services for posting and requires state agencies to cooperate with the advocate in administering the one-stop location on its Web site.
AB 2874 (Lieber) Civil Rights: damages
The California Fair Employment and Housing Act limits the total amount of actual damages that the California Fair Employment and Housing Commission may assess against a respondent for a violation of the California Civil Rights Act of 2005. The amount was limited to $150,000 per aggrieved person. This would have deleted the $150,000 limitation on actual damages that may be assessed by California Fair Employment and Housing Commission against respondents who violate the act.
AB 2918 (Lieber) Employment: usage of consumer credit reports
This bill would have prohibited the user of a consumer credit report, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially job related, (2) required by law to be disclosed or obtained by the user of the report.
AB 3062 (Committee on Labor and Employment) Employment: termination: garnishment of wages.
This bill would have prohibited an employer from terminating an employee because garnishment of the employee’s wages has been threatened or the employee’s wages have been subjected to garnishment.
AB 3063 (Committee on Labor and Employment) Employment: criminal history
This bill would have prohibited an employer from asking an applicant for employment to disclose, or utilizing in an employment-related decision, information concerning a criminal conviction the record of which has been judicially ordered sealed, expunged, or statutorily eradicated, or information concerning a misdemeanor conviction for which probation has been successfully completed or otherwise discharged and the case has been judicially dismissed.
AB 1473 – Green Building Standards.
This new legislation, which amends the Health and Safety Code, confirms that the Building Standards Commission is responsible to develop and adopt green building standards for construction projects in California and collect fees to finance education and training activities of certain state agencies. On July 17, 2008, before AB 1473 was signed by the Governor and chaptered, the Building Standards Commission adopted the Green Building Standards Code which you can access http://www.documents.dgs.ca.gov/bsc/prpsd_stds/2007/2007_cgbsc_9-23-08.pdf. The green building standards are for the most part voluntary at this time. The CBSC anticipates adopting a comprehensive set of mandatory provisions by 2010.
Action: Review and implement those in effect; consult with local jurisdiction to determine any locally adopted standards in effect.
The foregoing list is not intended to be an all inclusive list of new construction laws, but rather sets forth the primary construction related new laws and cases. If you are interested in other new laws or want to review the full text of bills, resolutions, constitutional amendments they can be found on the internet at http://www.assembly.ca.gov/acs/ acsframeset2text.htm. That website also has each bills status, history, votes, analyses, and/or veto messages.
With the exception of the Legislative Counsel Digest material, this article, ©2009, was written by William C. Last, Jr. Mr. Last is an attorney who has been specializing in Construction Law for over 30 years.. In addition to belonging to a number of construction trade associations, Mr. Last holds a California “A” and “B” license. He can be contacted at 415-764-1990 or 650-425-7679. A number of his past articles can be found on his website (lhfconstructlaw.com). This bulletin is published periodically to provide general information about current legal issues. The articles are not intended to be a substitute for the advice of an attorney as to a specific problem. If you have a specific legal question or need legal advice, you should contact an attorney.